COSCO International Announces 2013 Interim Results

HONG KONG, August 20, 2013 /PRNewswire/ --

Results and Operation Highlights

• Revenue slightly decreased by 0.4% to HK$4.5 billion as compared to the same period of 2012.
• Gross profit down by 10% to HK$328 million year-on-year, the overall gross profit margin slightly dropped by 0.8 percentage point year-on-year to 7%.
• Profit attributable to equity holders of the Company declined by 44% year-on-year to HK$131 million, but remained flat as compared with 2H2012. If excluding the one-off reversal of trade receivables impairment provision of HK$29.66 million in 1H2012, profit attributable to equity holders of the Company in 1H2013 would have decreased by 35% YOY.
• Basic earnings per share were 8.65 HK cents. The Board declared an interim dividend of 2 HK cents per share.
• As at 30^th June 2013, the Group had net cash of HK$5.74 billion to support future development.
• Market recognition: On 9^th August 2013, COSCO International was selected as a constituent of the Hang Seng Corporate Sustainability Benchmark Index for the second consecutive year.

Business Review

• In 1H2013, the shipping market remained weak, and oversupply of shipping capacity was still serious, leading the operating environment of shipping companies and shipyards to further deterioration. Ship owners postponed newbuild delivery and adopted stringent cost control measures, while delivery of newbuilding vessel contracts decreased year by year. COSCO International's various core shipping services business segments were all suffered from the declining market demand and surging operation costs. As a result, the Group's profit before income tax (PBT) from shipping services declined by 45% year-on-year to HK$150 million, but up 16% as compared with 2H2012.
• PBT from the three traditional shipping services for shipowners (i.e. ship trading agency, marine insurance brokerage and supply of marine equipment & spare parts) declined by 36% to HK$76 million as compared with the 1H2012. They contributed 42% of the Group's total PBT. During the period, COSCO International seized the opportunity of being the sole agent for COSCO fleet's centralised procurement of marine spare parts and marine insurances, and improved the geographic presence of business and service network by completing the acquisition of Hanyuan Technical Service Centre in Hamburg, Germany, which would strengthen the capability of procurement and supply of marine equipment and spare parts in Europe.
• The coatings segment's PBT reached HK$61 million, accounting for 34% of the Group's total PBT and representing a 46% year-on-year decrease. The Group's two joint ventures, namely Jotun COSCO and COSCO Kansai, maintained their no.1 leading positions in China container and marine coatings markets. In 1H2013, Jotun COSCO completed the construction of its new factory in Qingdao while COSCO Kansai won the bid for the largest industrial coatings project of Hong Kong-Zhuhai-Macao Bridge with the contract amount of over RMB100 million.
• PBT from marine fuel supply segment was HK$13 million, down 69% as compared with 1H2012 and accounting for 7% of the total PBT. The decrease was mainly due to the one-off reversal of trade receivables impairment provision of HK$29.66 million in 1H2012. If excluding the one-off item, the PBT from marine fuel supply would have been up 17%.
• PBT from non-core general trading segment was HK$14 million, representing an increase of 235% as compared with 1H2012. The increase was attributable to the surged asphalt sales volume driven by the increased number of highway construction projects in the central and western regions of China.

Outlook

Mr. Ye Weilong, Chairman of the board of directors of COSCO International, commented, "Looking ahead, COSCO International will continue to push forward the expansion of existing businesses and the development of new businesses, with the condition of stringent risk management. We will capitalise on the role of being COSCO fleet's sole agent, and leverage on the economy of scale and technical advantages from COSCO fleet, to gain more favourable offers from manufacturers and further explore businesses outside COSCO Group. In addition, in accordance with the established strategic plan, COSCO International will strive to make good use of cash on hand by seeking opportunity to advance the building of global sales and service network, and to work on the potential acquisition projects related to shipping services within and outside COSCO Group. At the same time, we will actively study the expansion into the upstream and downstream along the value chain of our existing business, so as to become a global leading one-stop shipping services provider, thereby maximising returns to shareholders."

Editorial Note

The announcement of 2013 interim results is available on the website of the SEHK (www.hkexnews.hk ) and the Company's website (www.coscointl.com ). A webcast replay of the 2013 interim results analyst meeting will be available at the Company's website after 10:00pm, 20^th August 2013.

Company Background

COSCO International Holdings Limited ("COSCO International") is listed on the main board of The Stock Exchange of Hong Kong Limited. Its stock code is 00517. COSCO International is a constituent of Hang Seng Corporate Sustainability Benchmark Index. In recent years, COSCO International has focused its strategic business position on the development of the shipping services business. It aims to become a global leading one-stop shipping services, offering professional services to shipowners worldwide. Its core businesses include ship trading agency, marine insurance brokerage, supply of marine equipment and spare parts, production and sale of coatings and trading and supply of marine fuel and related products. The headquarters of COSCO International is in Hong Kong and its businesses network cover China Mainland & Hong Kong, Singapore, Japan, and Germany, etc. COSCO International is a listed company owned by COSCO (Hong Kong) Group Limited, which is a wholly-owned subsidiary of China Ocean Shipping (Group) Company ("COSCO"). COSCO is one of the major multinational conglomerates in the world, which focuses mainly on shipping, logistics, and ship building and repairing businesses as well as other shipping related businesses.

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